Correlation Between Autopistas Del and Transportadora

Can any of the company-specific risk be diversified away by investing in both Autopistas Del and Transportadora at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Autopistas Del and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autopistas del Sol and Transportadora de Gas, you can compare the effects of market volatilities on Autopistas Del and Transportadora and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Autopistas Del with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autopistas Del and Transportadora.

Diversification Opportunities for Autopistas Del and Transportadora

0.41

Correlation Coefficient

Autopistas Del  Transportadora

Very weak diversification

The 3 months correlation between Autopistas and Transportadora is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Autopistas del Sol and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and Autopistas Del is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Autopistas del Sol are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Autopistas Del i.e., Autopistas Del and Transportadora go up and down completely randomly.

Pair Corralation between Autopistas Del and Transportadora

Assuming the 90 days trading horizon Autopistas del Sol is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, Autopistas del Sol is 1.5 times less risky than Transportadora. The stock trades about -0.15 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  708,000  in Transportadora de Gas on December 27, 2024 and sell it today you would earn a total of  20,000  from holding Transportadora de Gas or generate 2.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Autopistas del Sol  vs.  Transportadora de Gas

Autopistas del Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autopistas del Sol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Transportadora de Gas

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Transportadora may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Autopistas Del and Transportadora

The main advantage of trading using opposite Autopistas Del and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autopistas Del position performs unexpectedly, Transportadora can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transportadora will offset losses from the drop in Transportadora's long position.

The idea behind Autopistas del Sol and Transportadora de Gas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.